Investment products labelled as sustainable are on the rise globally. Yet less than 3% of all green bonds have a biodiversity and sustainable land use focus, including forests, thus far. New regulations such as the EU taxonomy – a classification system for sustainable activities – aim to channel more private investments into sustainable activities including forestry. While it is still unclear what will arise from this ongoing EU policy process, sustainable finance has potentially considerable implications for forests.
Currently, the financial sector contributes to deforestation by directly or indirectly investing in companies involved in the production, trade, manufacturing or sale of forest-risk commodities (esp. beef, soy, palm oil, timer). Such potentially unsustainable finance could be addressed through new regulations and changing investing and lending procedures. In addition, opportunities through new investment products, such as green or forest bonds, impact investing or “blended finance”, could be harnessed to close a made-out finance gap for forest conservation, sustainable management and restoration.
While the potential of sustainable finance for forests is obvious, the concept of sustainable finance is fuzzy at this stage and it remains unclear how it connects to forests in practice. In our new paper “Rich forests, rich people? Sustainable finance and its links to forests” we investigate the emerging expert debate on the topic. Curious about what narratives could be identified in the financial and forest sectors? Read the paper in the Journal of Environmental Management: https://doi.org/10.1016/j.jenvman.2022.116808
Related blog posts:
Watch interviews with experts: The financial sector: friend or foe of forests?
Read the policy brief: Sustainable Finance: How does it link to forests?
